The dollar and Swiss franc have gained ground while gold fell 8.5% in September, showing how higher borrowing costs and energy prices are pulling traditional havens in different directions.
Reuters reported on Oct. 20 that the dollar had risen about 4% since late February. The Swiss franc was up more than 2% against the euro so far in October, Reuters reported.
Reuters quoted ABN Amro strategist Georgette Boele as attributing the franc’s rise to concern about French public finances and political uncertainty in France and Spain. The Swiss National Bank held its policy rate at 0% on Sept. 24. SNB Chairman Martin Schlegel said the bank was prepared to intervene in currency markets when needed.
The International Monetary Fund (IMF) said the average 10-year government yield across the Group of Seven (G7) in September was more than a percentage point above its February level. IMF staff cited energy costs, inflation, stronger investment demand, AI-linked growth expectations, fiscal concerns and expected government bond issuance. The fund said higher debt-service costs are leaving governments less money for investment and social programs. Energy-importing countries, especially low-income developing countries, face the largest fiscal costs from the Middle East conflict, the IMF said. It also said G7 average 10-year yields were at their highest in nearly two decades.
Reuters reported that German 10-year yields fell earlier in October as comparable U.S. and French yields rose. It also cited investors who were limiting exposure to longer-maturity government bonds amid fiscal concerns.
World Gold Council data put the Jan. 29 LBMA Gold Price PM peak at $5,405 per troy ounce and the Sept. 30 price at $4,176, following the monthly decline. China’s State Administration of Foreign Exchange reported that official gold holdings rose from 76.73 million ounces at the end of August to 77.47 million ounces at the end of September. Bundesbank President Joachim Nagel has said gold can diversify reserves but pays no interest and carries storage costs.
The Federal Reserve raised its target range to 3.75%-4% on Sept. 16. Its next meeting is scheduled for Oct. 27-28, with a policy statement due at 2 p.m. EDT on Oct. 28.
